Perth offices find favour as market lifts
The West Australian capital is seeing a flurry of building sales as sentiment in Perth’s office leasing market picks up, with more than $600 million of assets now in play.
In one of the largest moves, Primewest is selling its half-stake in the Exchange Tower in a transaction that could value the entire complex at about $340 million.
The 40-level tower is co-owned by AMP Capital’s Wholesale Office Fund, which is yet to determine its position, although it is seen as unlikely to sell.
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Primewest bought its stake in the tower at 2 The Esplanade two years ago, from the Private Property Syndicate run by Vicinity Centres. That deal valued the complex at $227 million, but Primewest partnered with AMP Capital on a capital expenditure program that lifted the building’s quality and slashed its vacancy.
The transformed premium-grade office building has won several new tenants, taking its occupancy to about 88%.
Primewest and AMP Capital are undertaking a $50 million upgrade, including improvements to the lifts, a reworked forecourt and lobby, and increased retail presence. The 34,479sqm building has tenants including Patersons, Morgan Stanley, Bell Potter, Allen & Overy, Bain International, Mitsubishi Australia, Mitsui, RSM, Azure Capital, Arup and Knight Frank.
It’s now difficult to find large contiguous floors of space and we feel that vacancy rates will continue to fall
JLL’s John Williams and Inc RE’s Josh Cullen are marketing the Primewest stake.
More than $250 million worth of deals are already in train in Perth as values pick up.
The listed Elanor Investors Group is buying WorkZone West from a Charter Hall-managed trust, for just over $125 million.
Meanwhile, an offshore group is in due diligence to buy Perth’s Optima Centre, a two-building office complex being sold by BlackRock for about $130 million.
The in-play Investa Office Fund is also selling a complex at 836 Wellington St in Perth, with five groups through to a second round of bidding.
The tower is being sold with hopes of about $100 million and has attracted interest from CorVal and Primewest.
GDI chief executive Steve Gillard, who runs a portfolio weighted to Perth, says the city’s leasing market has improved above expectations.
“It’s now difficult to find large contiguous floors of space and we feel that vacancy rates will continue to fall,” he says.
The next major marker for Perth will be the outcome of the long-running contest to house US energy giant Chevron. It is weighing up a shift to a new Perth headquarters and has proposals from developers Brookfield and a venture between Lendlease and GDI for new towers.
This article originally appeared on www.theaustralian.com.au/property.
